Paving the way for the Modi government’s first major economic reform, Parliament approved Thursday a long-pending bill to increase the foreign investment limit in insurance from 26 per cent to 49 per cent after the opposition Congress and some other parties backed the ruling NDA in Rajya Sabha where it is in a minority.
The bill to open the insurance sector, first moved in 2008, had been hanging fire On Thursday night, a thinly peopled Rajya Sabha – only 95 members voted, and negated, amendments moved by Left parties in the 243-member House – passed The Insurance Laws (Amendment) Bill, 2015 by a voice vote.
The SP, BSP, JD(U) and DMK staged a walkout after members opposing the bill made their point. But the Congress, NCP, BJD and AIADMK stood by the government which also had the support of allies Shiv Sena and Akali Dal.
Before they voted to help pass the bill, Congress members made it known that had it not been for the opposition earlier from the BJP, major financial reforms would have been on track.
The bill, which had been cleared by Lok Sabha on March 4, will replace the ordinance promulgated last December once it receives the nod of the President.
It was introduced after a debate over technicalities since a similar legislation was pending — the 2008 bill, moved by the then UPA government, was subsequently withdrawn with leave of the House.
CPM’s P Rajeeve insisted on a ruling. He wanted to know if it was possible to introduce a bill passed by Lok Sabha when a bill of the same name was already the property of Rajya Sabha — it had been sent to the select committee.
He sought a clarification on which bill would be taken up, the one with the select committee or the one approved by Lok Sabha. Deputy Chairman P J Kurien ruled that the latter could be taken up as it was a “unique and unprecedented” situation.
SP’s Naresh Aggarwal said Kurien had precipitated a “constitutional crisis” with his ruling. There was a heated discussion and two adjournments — of 10 minutes and 30 minutes.
Thereafter, there were not too many hiccups in the passage of the bill. It seeks to amend the Insurance Act, 1938, the General Insurance Business (Nationalisation) Act 1972 and the Insurance Regulatory and Development Authority Act, 1999.
Earlier, D Raja (CPI) moved a statutory resolution opposing the ordinance promulgated in December, immediately after the winter session of Parliament. He said the ordinance route to raise the insurance cap was “detrimental” to the interest of the country and would only encourage those foreign insurance companies, which fail in their market, to exploit the Indian market. He was supported by P Rajeeve and Derek O’Brien (Trinamool Congress).
Moving the bill for consideration and passage, Minister of State for Finance Jayant Sinha said increase in the FDI cap would ensure better insurance penetration and expansion of the sector into areas such as crop and health insurance. He allayed opposition fears about flow of premium out of the country.
The bill provides for imprisonment up to 10 years for selling policies without registration with the Insurance Regulatory and Development Authority.
Ram Gopal Yadav (SP), who said he did not wish to obstruct the bill, warned the government that the move would lead to the entry of bankrupt foreign companies and some which would kill state-run LIC. Urging the government to make regulator IRDA effective, he said: “IRDA chairman is Finance Minister. Not a single meeting has been held. Reconstitute it and make it effective.”
Derek O’Brien said: “They believe FDI is the magical herb to cure all ills in India.” He quoted BJP leader Yashwant’s Sinha’s speech opposing FDI in insurance to try and embarrass his son, the minister.
Supporting the bill, AIADMK leader A Navaneethakrishnan said the government had incorporated good safeguards while raising the FDI cap.